Influential lobby groups and business houses have taken up the issue with various arms of the government like the ministry of corporate affairs, the Planning Commission and the CCI in the hope that the provisions may be altered.
Industry's biggest concern centres on M&As. The Act says any company with assets of Rs 1,000 crore (Rs 10 billion) or more and a turnover of Rs 3,000 crore (Rs 30 billion) or more has to seek CCI approval for any "combination" (merger, acquisition or amalgamation) within 30 days of signing the deal.
Any company of a smaller size that belongs to a group with assets of Rs 4,000 crore (Rs 40 billion) or a turnover of Rs 12,000 crore (Rs 120 billion) will have to go through the same process if it decides on an M&A.
Industry has argued that hundreds of well-known companies and innumerable group companies will come under the CCI lens as a result of these stipulations.
Data from the Business Standard Research Bureau show that there are 341 companies, including financial services firms and public sector undertakings, with assets of over Rs 1,000 crore and 106 companies with sales of over Rs 3,000 crore.
Commenting on the threshold limit for assets, noted corporate lawyer Naveen Goel said, "This asset-based test is a retrograde step taking us back to the asset test of Rs 100 crore (Rs 1 billion) under the Monopolies and Restrictive Trade Practices Act, 1984, which in real value terms would be in the same range as a threshold now prescribed in the Competition Act, 2007".
Though that could be the worst-case scenario, experts also feel the asset and turnover thresholds would be particularly detrimental to capital-intensive businesses like petroleum, telecom, steel, and cement.
This apart the CCI has to give its verdict on M&As within 210 days, which can be extended by another 60 days, failing which the application will be deemed approved.
Industry fears that a 210- to 270-day wait will slow the pace of M&As, since no seller would be willing to wait that long.
Acting Chairman Vinod Dhall, however, has said the CCI was planning a three-stage framework so that many cases will be cleared in 30 to 60 days.
"Only complicated cases will go to the next stage," he said. Dhall expects up to 85 per cent of M&A cases to be cleared within the stipulated time frame.
Another provision industry is finding hard to digest concerns overseas acquisitions. The provision says that a company has to seek CCI approval if it wants to acquire another company or an asset abroad that may have no presence in India.
This will impact the current boom in overseas acquisitions, experts say.
To address the problem, Dhall says the CCI is planning to include a guideline that the matter will be brought to the CCI's notice only if the acquisition target has operations in India.
Among other issues that industry finds irksome is the fact that the Act defines acquisitions very broadly and specifies no minimum threshold, leaving all acquisitions open for CCI scrutiny.
"This opens the door for a great deal of paperwork," an industry expert said, adding: "It would even bring creeping acquisitions under CCI review as the Competition Act overrides all others including the Sebi Act."
In fact, industry fears that the CCI lacks the secretarial bandwidth to deal with all paperwork that will inevitably inundate it once the Act is fully notified, which could lead to delays and corruption.
Against an initial requirement of 120 professionals the CCI currently has only 26, including Dhall.
The Indian Institute of Management Bangalore had recommended a strength of 480 professionals, including lawyers, financial analyst and economists, for the CCI.
Moreover, market dominance as a result of an M&A is not quantitatively defined in the Act - it is left to the discretion of the CCI. "This may pose difficulty in establishing facts, given the lack of reliable data," said the expert.
Industry is also stoutly resisting the definition of predatory pricing under the Act. The Act defines predatory pricing as one in which a good or a service is sold below cost.
Lawyers say this could hamper all introductory pricing initiatives and lead to paperwork and litigation over what should be included in the definition of costs.
Dhall, however, said the CCI was "very sensitive to the concerns of the business community in our regulations and guidelines. We want to make this simple and bring down the cost of compliance."
